ORKLA A NNU AL R EP OR T / 2011 Annual Report 2011 IC ECOL D AB R E Orkla ASA Office address: Tel: +47 22 54 40 00 www.orkla.com O L N P.O. Box 423 Skøyen Karenslyst allé 6 Fax: +47 22 54 44 90 [email protected] NO-0213 Oslo, Norway NO-0278 Oslo, Norway Enterprise number: NO 910 747 711 Contents Message from the CEO 4 The Board of Directors of Orkla ASA 6 Report of the Board of Directors 8 The Group Executive Board 22 Corporate Governance 23 Annual Financial Statements 2011 32 Notes to the Financial Statements 37 Financial Statements for Orkla ASA 81 Historical key figures 90 Group Directory 91 Organisation 95 Governing bodies and elected representatives 96 Financial calendar for Orkla ASA DATE EVENT 19.04.2012 Annual General Meeting 20.04.2012 Share traded ex.-dividend* 03.05.2012 Dividend payment* Front page: The figures are a selection from the ornamental work of art unveiled at Orkla’s head office in 2011. The artist, Benjamin Bergman, has made a thorough study of 03.05.2012 1st quarter 2012 Orkla’s history. The work spans all six floors of the building, and consists of 18 levels and 357 figures, one from each year since Orkla was founded. 20.07.2012 2nd quarter 2012 31.10.2012 3rd quarter 2012 *Subject to the approval of the proposed dividend at the General Meeting. Design and production Cox Design, Oslo | Photo: Guri Dahl/tinagent.no | Photo above: Werner Anderson, Cox | Print: Aktiv Trykk AS Orkla_aars_eng_omslag_orig_1303.indd 3 13.03.12 18.24 / The Orkla Group / Orkla Annual Report 2011 The Orkla Group Orkla operates in the branded consumer goods, aluminium solutions, renewable energy, biobased chemicals and financial investment sectors. Group sales total NOK 61 billion. Orkla has approximately 30,000 employees and operates in 41 countries. 42.5% Hydro Power • Foods Nordic • Profiles • Brands Nordic • Heat Transfer Share Portfolio • Brands International • Building System • Food Ingredients 39.7% Operating revenues (NOK million): 24,621 Operating revenues (NOK million): 30,844 EBITA1 (NOK million): 2,784 EBITA1 (NOK million): 812 Number of man-years: 13,581 Number of man-years: 14,314 ¹ Operating profit before amortisation and other income and expenses. key figures1 2011 2010 2009 2008 2007 Operating revenues (NOK million) 61,009 57,338 56,228 65,579 63,867 EBITA2 (NOK million) 4,041 3,944 2,448 4,240 5,112 EBITA margin2 (%) 6.6 6.9 4.4 6.5 8.0 Profit/loss before tax (NOK million) -923 20 1,071 -2,015 10,059 Diluted earnings per share (NOK) -0.8 -0.9 2.5 -2.8 8.1 Return on capital employed, from industrial activities3 (%) 10.7 10.5 5.2 9.4 11.5 Total dividends per share (NOK) 2.504 7.50 2.25 2.25 2.25 Equity ratio (%) 51.8 53.6 51.7 47.7 58.3 1 Figures as reported in 2007–2010. 2 Operating profit before amortisation and other income and expenses. 3 See definition on page 90. 4 Proposed dividend. 3 / / Message from the CEO / Orkla Annual Report 2011 Bjørn M. Wiggen, President and CEO Orkla ASA Message from the CEO Orkla has spent the last year refining and sharpening the focus of our strategic direction. When I took up the post of President and CEO in the autumn of 2010, we indicated early on that the Group had become too broad-based to be able to fully support the development of all our business areas. Selling Elkem was part of the process of simplifying the Group and strengthening our focus on the areas in which the Group has the greatest potential for value creation. Additionally, our share portfolio has been significantly reduced. All in all, since the autumn of 2010, Orkla has divested operations and sold shares for around NOK 20 billion. / 4 / Message from the CEO / Orkla Annual Report 2011 Orkla sets its sights high – we aim to deliver long­term value creation and outperform relevant investment alternatives. On Orkla Investor Day, held on 14 Sep­ seeing that limited access to capital efforts have been made to promote tember, we communicated a clear vi­ and expertise can impose constraints innovation to ensure that Borregaard sion for the future of Orkla. The core on their further development. These has a good, balanced portfolio of inno­ of the Group’s operations will lie trends offer significant growth oppor­ vations for the future. within branded goods. Consequently, tunities for Orkla. Orkla will focus on over a period of time, we will replace acquiring companies or brands with The Group’s primary challenge in 2012 several of our current businesses with strong market positions in clearly defi­ will be to deliver on its strategy of new entities in the branded goods ned, relevant markets, based on custo­ transforming the company into a bran­ sector. The Share Portfolio, REC, Borre­ mer insight and differentiated pro­ ded goods company. We are not in a gaard and Sapa thus lie outside the ducts. Acquisition candidates must be hurry, and value will determine the company’s future growth scope, and able to demonstrate stable cash flow timing of our transactions. During the Orkla will gradually divest these despite cyclical fluctuations, as well as transformation phase, it is crucial that investments. a potential for further growth. This we also maintain focus on continuously means that Orkla will not become a improving our operational performance A focus on branded goods is not new smaller, but a more focused, com pany in the companies and markets in to the Orkla Group. From 1986 to – we will continue to build on our which we already operate. 2003, growth in Orkla mainly consis­ platform as the Nordic region’s leading ted of organic or structural growth in branded goods company. Orkla sets its sights high – we aim to precisely the branded goods sector, deliver long­term value creation and with the establishment of separate di­ Sapa is more cyclical, and is less resis­ outperform relevant investment alter­ visions for Media, Beverages, Foods tant to general economic trends than natives. This level of ambition requires and Brands. The branded goods seg­ Orkla Brands. In 2011, the global econ­ a competent team of staff and the ment accounted for between 80% and omic outlook weakened, especially in strong commitment of each individual 90% of Group sales during that period. Europe. Sapa has succeeded in creat­ employee. Orkla has few natural ad­ ing profitable growth in North America, vantages, and it is only by developing For many years, Orkla Brands has de­ and has introduced similar structural people that we can continue to create monstrated its ability to both develop measures into its European profiles value. and manage strong branded goods business during 2011. In Asia, Sapa positions in the Nordic countries. The has now established its business In closing, I would like to thank all our multi­local model, based on strong lo­ system through several acquisitions in employees for their dedicated efforts cal brands and a strong local business 2011 and the conclusion of an agree­ in a demanding year of change for the system, has provided a good competi­ ment to establish a jointly owned Group. tive edge against both international entity with Chalco for the production rivals and the grocery sector’s private of high­speed trains in China. labels in the geographical areas in which we operate. In 2011, Borregaard saw good growth and delivered record­high operating We see several branded goods compa­ profit. In addition to benefiting from nies looking for new owners, both in favourable markets, Borregaard has the Nordic region and in other areas in succeeded in improving its production which we currently operate. Private process, among other things by estab­ equity companies are rolling their lishing a common control centre for its Bjørn M. Wiggen portfolios, while other companies are Sarpsborg operations. Systematic President and CEO 5 / / The Board Of Directors of Orkla ASA / Orkla Annual Report 2011 The Board of Directors of Orkla ASA 1 2 3 shareholder-elected members of the board of directors 4 5 6 7 8 9 employee-elected members of the board of directors 10 11 12 employee-elected board observers / 6 / The Board Of Directors of Orkla ASA / Orkla Annual Report 2011 shareholder-elected members of 4 Skandinaviska Enskilda Banken. 10 the board of directors Mr Ovesen and related parties 2 1 bJØRG veN own 20,000 shares in Orkla ASA . sidsel kJELDAAS SALTE Degree in Law (University of Oslo). Mr Ovesen attended 9 Board Chair of the Executive Committee for 1 STEIN erik HAGEN, BOARD chair meetings in 2011. Salaried Employees at Orkla since Degree from the Retail Institute First elected to the Board in 2006 and up 2010 and secretary of Orkla’s (now the Norwegian School of for re-election in 2012. Lawyer in private Committee of Union Representatives 7 Retail). practice with authorisation to appear and its Working Committee since before the Supreme Court and partner in BARBARA m. THORALFSSON 2011. In 2008 elected as deputy First elected to the Board in 2004 and the Law Firm of Haavind AS. Chairman MBA (Columbia University) and BA member of the Board of Orkla up for re-election in 2012. Retailer and of the Appeal Board of the Oslo Stock – Psychology (Duke University). Brands AS. Head of the trade union founder of RIMI Norge AS and Hakon Exchange and Chairman of the Board of at Lilleborg since 1996 and member Gruppen AS from 1976. Co-founder of the Norwegian State Finance Fund.